Bad News For Obama As U.S. Private Company Optimism Sours

With less than three months to go before Americans take to the polls to decide whether or not to keep Barack Obama in the White House, PricewaterhouseCoopers released some disappointing survey data that shows just how hard of a row the president has to plow.

Private companies in the U.S. are losing their confidence in the U.S. economy, PwC said on Tuesday.

It's not all bad, mind you. More business owners are positive about the U.S. than they are negative. But more of them are negative now than they were in the first quarter, PwC's survey found.

In the second quarter of 2012, half of leading private companies in America were optimistic about the economy and few were pessimistic (12 percent), and a fair number remained uncertain (38 percent), according to PwC's Private Company Trendsetter Barometer. The biggest movement between the first and second quarters was in the percentage of executives reporting optimism about the economy, dipping by 10 points. The percentage of executives voicing uncertainty and pessimism, meanwhile, rose by 6 and 4 points respectively.

"Continued fluctuation in private-company optimism is to be expected while the US economic recovery remains slow and the Eurozone unsettled,” said Ken Esch, a partner with PwC’s Private Company Services practice. “This up-and-down movement in confidence has been a consistent pattern over the past several years and signals a prevailing sense of uncertainty. It may take a few consecutive quarters of sustained high confidence before private companies feel they've truly turned a corner and are ready to pursue growth more aggressively."

Those who are the most optimistic about their business are those doing business overseas.

The decrease in forecasted revenue is coming solely from companies that are U.S. focused and do not sell product or services abroad. Their projected revenue growth dropped to 6.9 percent, whereas companies that sell internationally projected 9.7 percent growth. For companies selling in China, India, and Brazil, the growth rate was even higher, at 11.3 percent. However, the expected 12-month contribution of international sales to total revenue for companies selling abroad declined slightly for the second quarter, dropping from 21 percent to 18 percent, so emerging markets are not the nirvana they once were.

“Private companies are factoring a number of variables into their growth projections," Esch said in a press release. "In addition to the slow US recovery and ongoing Eurozone troubles, there's also the US presidential election, potential year-end legislation, and looming tax issues — all of which will affect the direction that the economy takes over the next 12 months. Against this backdrop, emerging and other fast-growth markets continue to be bright spots, offering attractive opportunities for US private companies that are finding it difficult to meet their growth objectives through domestic sales alone.”

On Tuesday, the SPDR S&P 500 exchange traded fund (SPY) closed relatively flat, up just 0.01 percent to $140.79 per share. SPY is up 12.18 percent year to date, surpassing the iShares MSCI Emerging Markets (EEM) ETF, up 6.4 percent.